MSc Banking and Finance degree

This module will develop your familiarity with the fundamental concepts of financial economics to prepare you for further study in more advanced topics and modules in finance. You will also learn how to model the behaviour of investors under conditions of uncertainty and how to apply theoretical models in both asset pricing and the evaluation of capital market efficiency.

Module content

Topics covered may include:

• fundamental mathematical techniques in finance:
  • discounting and compounding in discrete and continuous time
  • calculus and constrained optimisation
• Taylor's series:
  • elementary matrix operations
• yields and the pricing of bonds and discount securities using present value methods
• the term structure of interest rates and the interest rate risk of bond portfolios
• present value models of asset pricing
• the concept of capital market efficiency and tests of efficiency
• the expected utility hypothesis, utility functions and investor choice under uncertainty
• diversification, mathematical optimisation and the mean-variance model
• single index and multi-index models
• the capital asset and arbitrage pricing models:
  • their derivation, interpretation and application
• tests of asset pricing theory and asset pricing anomalies
• hedging, speculation and arbitrage
• an introduction to the basic features of options and futures
• the single-period binomial option pricing model,

Learning outcomes

On completion of this module you will be able to:

• describe the main classes of financial assets and derivative instruments
• explain the nature of risk and risk-reduction in financial markets
• describe and evaluate models of attitudes to risk and explain how attitudes to risk influence both portfolio choices and the market prices of assets
• explain the concepts of equilibrium and arbitrage and show how they are used in models of asset pricing
• analyse the relationship between capital market efficiency and equilibrium
• evaluate tests of capital market efficiency and explain the significance of market efficiency for resource allocation
• use mathematical and statistical methods to construct diversified equity portfolios
• explain both formally and intuitively how portfolio selection leads to risk-reduction
• use simple examples to show how derivative instruments can be used in the hedging of risk
• derive and explain key equilibrium asset pricing models and use them to value securities
• construct simple tests of capital market efficiency.

Leaching and learning

• practical classes and workshops: 10 hours
• lectures: 24 hours
• guided independent study: 116 hours

Assessment

• in-class test: 25%
• 2-hour exam: 75%

This module will provide you with an overview of the financial system, including:

• an appreciation of the economic problems that financial institutions and markets seek to overcome
• an understanding of the organisation and operation of the major financial institutions and markets
• an appreciation of the impact of technology and regulation on the evolution of the industry
• an awareness of how alternative structures of financial systems seek to solve common problems.

Module content

Topics studied may include:

• an overview of the financial system
• a short history of money and banking
• banking products and services
• bonds and bond markets
• corporate governance and external finance
• payment systems and the central bank
• equity markets and equity trading
• foreign exchange, commodity and derivative trading
• market infrastructures and international exchance
• money markets, liquidity and the global financial crisis.

Learning outcomes

On completion of this module you will have an understanding of:

• the functions of a financial system
• the structure of the global financial system
• the contractual and informational costs involved in financial intermediation
• the main types of financial institution and the principal markets in which they operate
• the historical development of money and banking and of bond and equity markets
• the role of the central bank in the financial system
• the broad costs and benefits of different financial activities
• many of the key terms widely used in financial markets and financial institutions
• the balance sheets and income statements of banks and other financial intermediaries
• some of the major controversies about the efficiency and stability of the financial system.

You will also be able to:

• access and summarise data from BankScope and other financial databases
• identify and extract key information from a large body of printed and electronic material on the internet and in the financial press and other sources
• communicate technical and analytical information and form constructive arguments.

Teaching and learning

• practical classes and workshops: 2 hours
• lectures: 23 hours
• guided independent study: 125 hours

Assessment

• Wiki project: 5%
• financial institution report (written in pairs): 25%
• 2-hour exam: 75%

This module will develop your competencies in the practical techniques economists often use to handle, analyse and interpret economic data. It will therefore provide you with a solid foundation of the econometric techniques and skills that form the basis for the quantitative/econometric modules of this master's programme.

Module content

Topics covered may include:

• an introduction to econometrics
• statistics
  • regression analysis
  • statistical inference and hypothesis testing
  • dummy variables
  • different functional forms
  • departures from main assumptions (multicollinearity, heteroskedasticity, specification bias and autocorrelation)
• practical labs
  • applied direct analysis of economic data using STATA (or other equivalent software).

Learning outcomes

On completion of this module you will:

• have developed a sound understanding of some of the fundamental, yet important mathematical and statistical techniques often used by economists
• be able to appraise economic arguments through the quantitative analysis of economic data
• become familiar with the use of at least one econometric computer package and be able to use it to formulate and estimate empirical models, as well as interpret the output and conduct hypothesis tests
• have knowledge of how the estimates and output obtained can be assessed and to be able to carry out simple regression diagnostics
• understand the basics in handling and compiling of economic data for analyses
• be able to use econometric packages to analyse data and estimate models.

Teaching and learning

• practical classes and workshops: 10 hours
• lectures: 24 hours
• guided independent study: 116 hours

Assessment

• coursework in-class test: 25%
• 2-hour exam: 75%

This module will expose you to the microeconomic theory of producer and consumer decision making and will provide a solid grounding in the economic theory and analytical methods employed in subsequent modules.

Module content

Topics covered may include:

• consumer choice, including utility maximisation
• theory of the firm, including production functions, and profit and cost minimisation
• general equilibrium and welfare
• Pareto efficiency and the two fundamental theorems.

Learning outcomes

On completion of this module you will be able to:

• understand and analyse microeconomic models of consumer and producer behaviour, and general equilibrium in competitive markets
• apply microeconomic models to aid understanding of observed behaviour and outcomes so as to better understand and inform economic policy and business strategy
• use analytical tools and deductive reasoning to analyse real world behaviour and outcomes.

Teaching and learning

• practical classes and workshops: 8 hours
• lectures: 24 hours
• guided independent study: 118 hours

Assessment

• in-class coursework test: 25%
• 2-hour exam: 75%

The aim of this module is to provide students with an understanding of the main models used for macroeconomic policy formulation at the graduate level.

Module content

Topics covered may include:

• macroeconomics, finance and measurement:
  • income accounting
  • flow of funds analysis and role of money
• the principle of aggregate demand:
  • savings
  • investment
  • net exports
  • the IS curve
• financial markets, aggregate demand and monetary policy
• fiscal policy
• the foreign exchange market, the balance of payments, exchange rate and international policy formulation and co-ordination.

Learning outcomes

On completion of this module you will:

• have developed an understanding of important areas of macroeconomic policies and be able to undertake analysis of the policies as regards to financial markets and the economy as a whole
• be able to use macroeconomic models to answer policy related questions
• understand and explain the causes of debate within the subject area
• explain the operation of monetary and fiscal policy
• have developed analytical and technical skills in macroeconomics, along with presentational skills for written work.

Teaching and learning

• practical classes and workshops: 8 hours
• lectures: 24 hours
• guided independent study: 118 hours

Assessment

• in-class coursework test: 25%
• 2-hour exam: 75%

This module will equip you with the quantitative techniques necessary to conduct empirical work in the area of applied finance and economics.

Module content

Topics studied may include:

• Unit roots
• cointegration
• general autoregressive heteroscedasticity and its applications in finance
• limited dependent variable models
• panel data techniques.

Learning outcomes

On completion of this you will:

• have acquired knowledge of quantitative techniques used in applied finance and economics
• be able to apply the techniques taught using appropriate econometric software.
• have developed skills in decision making, numeracy and clear communication.

Teaching and learning

• practical classes and workshops: 4 hours
• lectures: 20 hours
• guided independent study: 126 hours

Assessment

• 4 x 1,000-word coursework assignments based around directed applied econometric work: 40% (10% per assigment)
• 2-hour written examination: 60%

This module will provide an in-depth analysis of the causes, implications and regulatory responses to the recent global banking crisis. In particular, the objectives are:

1. to review and analyse the theoretical basis of financial innovation and its impact on financial institutions and markets, and the role of derivative instruments in the banking crisis
2. to review and analyse price- and credit-derivative instruments
3. to analyse in depth the nature, causes, policy responses, and implications of the global financial crisis
4. to consider post-crisis scenarios for bank business models and regulation.

Module content

Topics studied may include:

• financial innovation and instruments
• securitisation
• credit derivatives
• nature of the banking and financial crisis
• causes of the crisis
• policy responses and intervention
• financial regulation.

Learning outcomes

On completion of this module you will:

• have an understanding of securitisation, the role of derivative instruments, changing bank business models, how financial crises emerge, the role of regulation in banking and the financial system, the new economics of banking, and the central role of capital in banking.
• be able to understand the operation of derivative financial instruments such as swaps, options, forward agreements, credit derivatives, etc.
• understand the evolution of bank business models
• understand how crises emerge in banking systems
• be able to appreciate the objectives and role of regulation in the financial system.
• be able to assess the nature of banks business strategies
• have acquired skills in understanding issues in applied financial analysis
• be able to critically assess media comment on banking and regulation issues.

Teaching and learning

• lectures: 20 hours
• guided independent study: 130 hours

Assessment

• coursework (3,000 words): 25%
• 2-hour exam: 75%

This module will develop skills allowing you to:

1. enhance your oral presentation and communication skills for both academic research and employment
2. develop spoken and written specialist language to suit the high-level communication requirements and style of project proposals and project reports, for both research and employment
3. conduct critical constructive synthesis of specialist literature
4. be prepared for subsequent research training and project modules.

Module content

Topics studied may include:

• literature search using library and online literature databases
• analysis, synthesis and communication of research ideas and findings, using prescribed pedagogic sets of readings
• writing reviews of prescribed pedagogic sets of readings using appropriate specialist language and structure
• preparation of short presentations
• recognition and avoidance of plagiarism and poor scholarship.

Learning outcomes

• On completion of this module you will be able to:
• apply the skills and methods needed to carry out an economics-based literature search
• analyse and synthesise a body of academic and policy-related literature
• conduct a written literature review by constructive critical synthesis
• formulate proposals for new research or policy-related work

Teaching and learning

• lectures: 9 hours
• practical classes and workshops: 21 hours
• guided independent study: 70 hours

Assessment

• literature review (individual report): 20%
• literature review (oral presentation): 20%
• individual oral presentation: 30%
• 1,000-word written report: 30%

This module will introduce you to options, futures, swaps and other derivative instruments and their use in asset management.

Module content

Topics covered may include:

• the market for options and futures
• the concept of arbitrage
• fundamental option price theorems
• put-call parity
• derivation of the Binomial and Black-Scholes option pricing models
• valuation of futures contracts
• stock index, interest rate and currency futures
• examples of hedging and speculation using options, futures and swaps
• portfolio insurance
• bond portfolio management, duration and convexity.

Learning outcomes

On completion of the module you will:

• have acquired knowledge of the basic theory of options and futures pricing
• have gained an understanding of how different financial instruments can be combined into portfolios for the purpose of hedging, speculation and arbitrage
• be able to identify the fundamental concepts of derivative financial instruments
• be able to derive theoretical prices for options forwards and futures
• be able to recognise arbitrage opportunities in simple examples and suggest trade strategies to exploit them.

Teaching and learning

• practical classes and workshops: 4 hours
• lectures: 21 hours
• guided independent study: 125 hours

Assessment

• in-class test: 25%
• 2-hour exam: 75%

This module will present modern theories of corporate finance and show how these can be applied to understanding the financing and investment decisions of companies, particularly those quoted on the stock exchange.

Module content

Topics covered may include:

• corporate investment decisions in the absence of uncertainty
• investment and uncertainty
• the theory of capital structure and Modigliani-Miller
• event studies
• Tobin's Q and investment
• taxation and capital structure
• trade-off and pecking order theories
• empirical evidence on capital structure
• dividend policy.

Learning outcomes

On completion of this module you will have an understanding of:

1. project investment appraisal
2. the capital structure of a corporation
3. dividend policy
4. current issues in corporate finance.

You will also be able to:

• evaluate stylised investment projects, explain the rationale for the procedures used, and demonstrate an understanding of the concept of the cost of capital
• explain the Modigliani-Miller theorems and their implications for corporate financial decisions
• explain the rationale for event studies and know how event studies are carried out
• explain the main theories of corporate capital structure especially the role of asymmetric information and agency, and have an understanding of the empirical evidence on corporate capital structure
• demonstrate how the tax structure affects corporate investment and financial decisions, and explain the public policy issues involved in corporate tax changes
• explain the main theories of dividend policy and be familiar with the relevant empirical evidence
• determine optimal project investment strategies
• assess capital budgeting and corporate financing techniques.

Teaching and learning

• lectures: 20 hours
• guided independent study: 130 hours

Assessment

• in-cass test: 25%
• 2-hour exam: 75%

This module will explore issues related to the mechanics of currency markets, international finance and economics by using economic principles to examine international monetary arrangements and policy since 1945.

Module content

Topics covered may include:

• an introduction to exchange rates
• international parity conditions
• macroeconomic dimensions of international finance
• international monetary arrangements
• determination of exchange rates
• international capital flows: debt, currency crises and credibility.

Learning outcomes

On completion of the module you will have developed:

• an understanding of the international monetary system and the construction of economic modules to analyse these problems
• skills in modelling macroeconomic variables in international finance and be able to employ these skills in your own work
• skills in analysis of argument and fact, synthesis of debate, the evaluation of evidence and hypothesis, numeracy and clear communication.

Teaching and learning

• practical classes and workshops: 4 hours
• lectures: 24 hours
• guided independent study: 122 hours

Assessment

• 2,500-word essay: 25%
• 2-hour exam: 75%

This module will develop your skills in:

1. identifing and assessing complex issues in banking and finance
2. applying tools of analysis to practical and research issues in banking and finance to prepare you for employment in these sectors
3. team working capabilities in preparation for future employment
4. undertaking advanced independent study in an area of banking and finance.

Module content

The syllabus for this module will consist of selected topics related to banking and finance and will form a basis for the research undertaken as part of the Economics Research Project module.

• Topics covered may include:
• banking data sources
• statistical methods and techniques to analyse banking data
• banking performance
• competition and concentration in banking industry
• regulation and corporate governance issues in banks and financial intermediaries. 

Learning outcomes

On successful completion of this module you will be able to:

• interpret, summarise, critique, evaluate and justify the application of appropriate research findings and practices that are commonly applied in the areas of banking and finance
• robustly analyse relevant issues related to banking and finance
• make fully supportable recommendations with regards to how research findings should impact decisions made by policy makers, firms and consumers.

Teaching and learning

• lectures: 9 hours
• practical classes and workshops: 15 hours
• guided independent study: 176 hours

Assessment

• group presentation: 50%
• 3,000-word individual report: 50%

This module will:

1. allow you to apply and communicate your knowledge of economics via the development of an individual project essay in banking and finance
2. allow you to explore an issue of policy relevant to your research theme, exploiting the economic tools and techniques taught in your master's modules
3. see you critically reviewing an aspect of policy making and gaining experience in conducting a piece of original applied research whose conclusions provide robust recommendations for policy makers and other decision makers.

Module content

The module is focused on independent study aimed at identifying, proposing, researching and writing up an individual, distinct and in-depth applied economics research project. Your individual topic will be developed in consultation your academic supervisor and will be closely coordinated with your group project in the Banking and Finance in Practice module.

Learning outcomes

On successful completion of this module you will be able to:

• explain and critically discuss the main policy issues associated with your chosen topic in a specific field of economic research
• use applied economics based research methods appropriate to banking and finance
• analyse economic issues in a clear, systematic and coherent way
• write a succinct and logically coherent summary of competing ideas and concepts, analysing data using appropriate methods and clearly communicating research findings to a range of audiences.

Teaching and learning

• project monitoring workshop: 4 hours
• project supervision: 8 hours
• guided independent study: 288 hours

Assessment

• 7,000 word project report: 100%